Advice clients set to outperform

Australia is entering a market cycle in which financial planners are better positioned to demonstrate investment advice value to clients, according to research from CoreData.

In an exclusive interview with ifa, CoreData managing director Andrew Inwood said the current market environment is advantageous to advisers, and that investors without professional advice are likely to start falling behind.

“Over the past decade CoreData has conducted mystery shopping exercises, placing more than 100 people in professional financial planning,” he said.

“For the past five of those years, the benefit of being with a financial planner has been really unclear because the returns for those with a planner and without a planner have been pretty much on par.

“However for the past year, those that stayed with their financial planner have started to accelerate away from those investors without advice in terms of returns, and that’s because the planner has kept them disciplined and focused on proper long-term investing.”

CoreData research suggests investors, particularly self-managed superannuation fund trustees, are moving away from cash and towards investing in property and Australian equities. This more bullish investment market is conducive to financial planning, Inwood said.

“When cash is king, it’s hard for investment advisers to prove their value but as soon as equities start to run, which they are now, then advice clients are miles in front and unless there is a market crash, the others are unlikely to catch up,” he said.